FTC report outlines identity theft experiences, recommendations

Unwanted pressure to buy protection services from credit reporting agencies and the inability to speak to a live person when reporting an identity theft situation were the two most annoying issues victims identified in a Federal Trade Commission report issued on the growing problem this week.

The FTC issued a report summarizing the results of a survey of identity theft victims who were asked to describe their experiences dealing with consumer reporting agencies and, more generally, exercising their rights under the Fair Credit Reporting Act (FCRA)/Fair and Accurate Credit Transactions Act (FACTA), to recover from identity theft.

The FTC survey showed that most of the respondents were generally satisfied with their experiences, but the report also noted areas for improvement and concluded that:

• Consumer reporting agencies may need to make it easier for consumers to reach a live person.

• The FTC and the Consumer Financial Protection Bureau should use their respective authorities to address the consumer reporting agencies' practices related to selling identity theft monitoring products or services when they are contacted by identity theft victims.

• Victims expressed a number of frustrations when interacting with the credit reporting agencies, including delays in getting a credit report, a lack of trust on the part of the agencies, attempts to market products or services, and the lack of coordination between entities such as credit card companies, banks, the credit agencies and the police.

• The FTC and other enforcement agencies should do more to educate the public about their rights under FACTA. FACTA requires the CRAs to send a notice of consumer rights to any consumer who contacts them to report a belief that the consumer is a victim of fraud or identity theft. The notice must contain a summary of the rights available to consumers with respect to remedying the effects of identity theft and information on how to contact the FTC for more information. More than 45% of the respondents reported that they had received a notice from at least one of the CRAs they contacted. Fully 27% of respondents who contacted a CRA reported that they had not received a notice from any of the CRAs, and an additional 28% stated that they were not sure if they had received such a notice.

According to the FTC Congress has established several rights under the FACTA to help actual or potential identity theft victims protect themselves from, and recover from, identity theft. These rights let victims place fraud alerts on their credit report with the consumer reporting agencies, request a free credit report from the three national consumer reporting agencies when placing a fraud alert, block fraudulent information from appearing in their credit report, and receive a notice of these and other rights from the consumer reporting agencies.

In the end the FTC said given the difficult and stressful position of identity theft victims, every step should be taken to ensure that the tools available to remedy the effects of identity theft are as simple and easy to use as possible.

Of more than 1.8 million complaints filed in 2011, 279,156, or 15% ,were identity theft complaints, and of those, close to 25% were related to tax- or wage-related fraud. Florida is the state with the highest per capita rate of reported identity theft complaints, followed by Georgia and California. Maine, South Dakota and North Dakota were least likely places for identity theft.

• Government documents/benefits fraud (27%) was the most common form of reported identity theft, followed by credit card fraud (14%), phone or utilities fraud (13%) and bank fraud (9%). Other significant categories of identity theft reported by victims were employment fraud (8%) and loan fraud (3%).

The IRS recently said identity theft was one of its "Dirty Dozen" tax scams, saying that the agency is increasingly seeing identity thieves looking for ways to use a legitimate taxpayer's identity and personal information to file a tax return and claim a fraudulent refund.

Cooney is an Online News Editor and the author of the Layer 8 blog, Network World's daily home for the not-just-networking news. He has been working with Network World since 1992. You can reach him at mcooney@nww.com.